Failure to comply with loan terms - not a barrier for receiving next tranche

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April 22, 2016 18:23

The tranche is allocated despite non-fulfillment of its conditions. Russia has once again demonstrated conventionality of the obligations under the loan agreement and postponed the issue of Belarus’ state property sale for 2013.

On December 7th, at the ACF EurAsEC Council meeting it was decided to disburse the fourth USD 440 million tranche to Belarus.

At least three parameters indicated in a letter of intent to the EurAsEC Anti-Crisis Fund were not fulfilled. The growth in total bank loans in the economy has not been implemented, despite the transfer of some state-owned banks’ assets to the Development Bank. The requirement concerning the level of reimbursement by the population for the utilities and public transport tariffs has not been met once again. 

The country, which makes the final decision about the allocation of the loan’s next tranche, is Russia, because she remains the principal donor of the Fund. The allocation of the tranche is justified by some minor adjustments to the parameters that were not fulfilled. In fact, Russia focuses only on one indicator important for her, i.e. budget revenues from the sale of state property. All other parameters she considers supplementary and minor and adjustable.

The loan conditions oblige Belarus to sell government property worth USD 2.5 billion in 2012 and this condition has not been fulfilled. In summer 2012 this requirement was adjusted and linked to the allocation of the loan’s fifth tranche. In the meanwhile, the fifth and the sixth tranches had already been budgeted by Belarus in 2013. Understanding the importance of both tranches for Belarus and the significance of external debt payments by Belarus in 2013, Russia shifted the negotiations about tranches’ conditions to a more favorable period for herself, not exacerbating the issue in 2012.

Thus, the loan and its allocation are conditioned by privatization of Belarus’ state property, rather than fulfillment of individual parameters. It is assumed that Russian companies should have a priority, although this is denied by both parties. Belarus’ reluctance to sell SOEs will result in delayed loan allocation terms or in new loan conditions for Belarus.

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President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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